Psychology is nothing

Well you are right.
Knowledge is everything in Forex.

If let's say a godlike system appears that can predict every move then there will be no fear at all to trade freely.

People are forced to exercise some kind of feelings control since they are not aware of the true market's nature.

Like when thunder was considered to be a god...

p.s
Though I have something to add about psychology and human behavior.
Some totally insane things happened to me .
I saw a dream in which Eur was at 1.37 and it rose up to 1.61.
I saw that the King(I don't know what happened to the queen!!) of england made some sort of announcement and that Eur(I dont know what Gbp did and I really cannot understand why the king(!?) of england could affect Eur) started going up from 1.37 then it stalled for every 200 pips and I shorted it.Every time I shorted it ,it went down for 20 pips or something and then it spiked up for another 200 pips in a matter of seconds(I guess this is the worst forex trader's fear,a wild market going against you) while I kept shorting it every time it stalled.I kept shorting till it reached 1.50 and then it's just spiked up a 1100 pips to 1.61.
Then I woke up!
Back to reality now...
When Eur reached 1.4270 I knew it was a perfect short trade with a profit target at 1.4030 but still I couldn't pull the trigger since that dream had really affected me.So for the last weeks I stopped trading Eur/Usd at all untill either the dream comes true and eur reaches 1.61 (!!) or I can operate without the interference of illogical fears to my trading.
This is something I cannot explain as far as my psychology is concerned.

I happen to agree with the OP.

Most of the things discussed when speaking about the physcology of trading I feel are "backend"(for lack of a better word) types of things.
Off the top of my head

1. Learning how to learn
2. Adaptation to changing conditions
3. Having a clear mind so you may re-educate yourself
4. Understanding the players in the business and the forces that affect them
5. Discipline
6. Non emotional decision making
7. Humbleness

I feel these things are Life 101 and Business 101 and they stay with me in any of my life endeavors.

So when I first started to learn to trade futures, people would go on about how you have to have the proper mind state etc; and would start discussing techniques that I already apply in every area of my life.

Well that's cool, but not what I personally needed and it became frustrating to constantly hear that.
What I needed to know was how to quantify\qualify an advantage in this business. How to spot\exploit inefficiencies in supply and demand.

I'll handle the "backend" things.

So I think it's where you are at in your life journey. Where ever one discovers\learns the "backend" things is where one tends to get into the psychological\philosophical aspects about that subject. I know I do it for several things because those things taught me so much about life\business\myself.

Trading came later for me, so I don't associate my psychology to it.
I just need to know if have +EV, regardless of the game.

Just my 2 cent

Without getting too much into the whole debate, I cannot understand how anyone who has traded for a while cannot see that psychology is just as important as technical knowledge.

Completely not surprised to find the author of the thread to be BR. I already tried making my point in his transition thread and he already brought it up in the J16 thread as well.

Mike and raczekf and basically anyone inside the PF "gets it" I think.

I also think that as long as you refuse to "accept" you won't get there.


BR, I think you're still in denial.


The fact alone that you have now refused to accept and gone on to deny in not one, two but three threads and rather put the energy against it than to accept is about as loud and clear a proof as anyone would need.

Everything's up to you - you can't change the market, you can only change yourself.

Mindset(psychology, discipline, emotional control) is everything.

As for those that came into all this having already mastered that part(since I just saw Prime#'s post) - well good, then reading, understanding and applying the "knowledge" is just a question of practice. But without the groundstone of self-mastery trying to master anything else instantly becomes moot(and most of anyone I see struggling has that exact problem - not everyone starts out with that bonus, Prime#, and the irony is that what you perceive as "backend" and basically prerequisite sort of gets circumvented by brokers allowing anyone in with 500$(random figure, you know what I mean), regardless of whether they can or cannot show those qualities you listed. Coming into FX with them at your disposal is a major exception, not the rule. If you did, you are exceptional. That's the thing.).

And the question is whether we are arguing a general principle or specific cases.

Obviously if you're already "there" you no longer need to get there - and if you aren't, yet refuse to acknowledge it, you won't overcome until you do. Looking for others(instead of yourself) and "outside sources/reasons" imho is symptomatic.

It is mate, but it is not limited to trading.
It is important in EVERY aspect of life, trading just being a dot on the map of life.
I just related the OP 1st post because when I first started out, it was frustrating asking experienced traders direct\succinct questions, but getting yoda like responses pertaining to my mind state. I think in the end they were just trying to get me find my own way.

Agreed.

Thanks for the discussion.
You good folks take care.

OK, so if I took someone off the street that had a perfect mindset, let's just say that person was the most sane person on earth, totally in control of emotions, totally disciplined, but has never seen the first word about trading.

From what you say, they would be a profitable trader, right out of the chute.

I say impossible. I say they would have to learn to trade in order to be a successful trader. Disagree if you want, but read the sentence carefully. It's not a trick.

Now, I suppose, if someone were a mental wreck, they would never learn. I'll give you that. But that's not what we're talking about.

How about a hitman? There's someone with no emotion, but very insane. How would he do in trading?

It is interesting, actually downright comical, how only 2 people understand the OP, and those that don't understand are so insistent that I've got it exactly backwards.



But I'm sure it's just because they care so much about me.

If you read all the posts in this thread with an unbiased mind (which many might not) - you can see the majority of ones who think pschology is nothing or meaningless or less important, are the traders will this least experience. The ones who think it is everything or most important, are the most experienced. In other words, been there done that.

Draw your own conclusions.

You still don't seem to understand it though.

Emotional control is an integral part of any experienced trader's strategy.
What we are saying here is that we are forced to do that due to the fact that all systems have imperfections.If there were to exist the notorious holy grail of trading then emotions would have nothing to do with trading.

How so? I don't get your point.

And you definitely didn't get mine.

My point was, before I established a system to deal with that one thing, emotion ruled. Now that I made a decision that I know the right way to do it, emotion will never again affect the decsion.

This is what makes a good trader. Knowing what to do, and how to handle the many things that come up, and then doing it immediately.

Emotion is not a factor. Knowledge is everything.

I won't respond any more, this is a waste of time.

This is one tough crowd, hey?

It took a while, but I've learned to appreciate rude remarks, personal attacks and other forms of insult. They are much like the way the market jumps 100 pips for no apparent reason... an insult to my level of knowledge about the market. Now, I know those things are not directed at my $5.00 stop loss . It's just the markets' PMS way of trying to excite and stimulate me into action. Now I just tell the market, "I understand how you feel...everyone trying to ride your back to the promise land and all."

It's a bitch when your epiphany turns into an epoofany. Hang in there.

BTW Sorry for jerking you around with the Paris analogy, but I'm crazzy about the bitch. What can I say?

Man, I do envy your energy and positive outlook. You always sound like you're bouncing off the walls (in a good way).

That certainly doesn't hurt the learning process any.

But, back to my point, that won't make you a trader. Only learning to trade will.

Moot point. She don't need to trade, she's good at enough other things... which we won't get into....

Ya, all I was trying to point out is that she has the means to trade forever if she wished and with some good coaching even she could be a good trader.

Actually, I agreed with the part about knowledge is everything. How we attain the knowledge is the key IMHO. A little psychology in that regard isn't so bad. By that I mean that knowing how we as individuals learn best is usefull. For example I'm a visual learner. I have difficulty learning from printed words. I need the charts and the step by step chronological explainations to learn the fastest.

Take care

Psychology is not important in trading, it is EXTREMELY important.
Psychology is extremely important in every business, in every job, in every aspect of our life, because we are humans and psychology is the study of such phenomena as perception, cognition, emotion, personality, behavior, and interpersonal relationships of humans!
So there is no point in discussing if psychology is important in trading, it's a fact.

Biology is also extremely important in trading, because biology is the scientific study of life, and we, the traders, are living beings and so are also the programmers that create automated trading systems.

Information Technology is extremely important in trading now a day, because we trade using Internet and PCs.

...

Despite blueruby's two first sentences at the start of this thread I think blueruby central point about trading and psychology is NOT about how much important psychology is, but about how much HARD it is to master it. I think that what he would really say is that mastering psychology in trading is WAY LESS HARD than mastering all the rest of the howtos of the job, like finding good setups, entries, exits, stop loss, take profits, and so on, that means discovering a good strategy and formalizing it in a plan that as positive expectancy.

If this is what blueruby really intends then I completely agree with him.

Mastering the right attitude and the right behavior and being adequately disciplined in trading is not even by a span more hard than it is doing the same for a lot of other human jobs. If one is not able to be disciplined in trading surely he would also never, never be able to do a lot of other jobs, like a pilot, a surgeon, a fireman, a policeman, a soldier and every other job that implies risks.

The real specificity about trading is NOT mastering a super-human mysterious hyperspecial psychological attitude.

The real specificity about trading, what really makes trading an extremely hard job, is mastering a plan that has positive expectancy, and being forced to do this usually without any personally given help or any specific training. You don't do the fireman without training, still usually you do the trader forming yourself on your own. THIS IS THE REAL HARD SPECIFICITY ABOUT TRADING compared to other jobs. You are in a field you don't know and you have to discover things on your own. This is the HARD part. All the rest is equal to a lot of other jobs.

When you study to become a pilot there are a lot of things you have to study, really tons and tons of stuff. There is also a matter that is called "human factor" (that could be compared to psychology in trading). You know what? 98% of all air accidents are caused by "human factors". And you know what? The volume on "human factor" you study to become a pilot is the smallest of all the volumes of other matters that you study too. For God's sake, one could ask, and why is this if we know that 98% of all air accidents are caused by "human factors"?

Well, the answer is very, very easy. WE ARE WHAT WE ARE, we cannot change our inner nature, we cannot overcome the limits Mother Nature has imposed on us. We can only devise preventive PLANS to workaround our limits. And it is on those that we focus our study, not on "human factor" per se. So for an emergency on a flight no one pilot trainer will teach you how to control your emotions, how to stay calm, how important it is not to feel fear, and stuff like that (you see that only in movies). They teach you WHAT YOU MUST DO, what buttons you have to push, what levers you have to pull, what messages you have to send over the radio. THEY TEACH YOU THE "HOWTOS" not the attitude. The attitude will be a natural consequence of the intense training on "what to really, physically do". So what really saves you are the check-lists, the security checks before taking-off, the definite procedures you have to handle emergencies. No psychology, no psychology at all. Studying psychology will definitively not save you. You study that only to really understand why check-lists and predefinite procedures exist. But what really saves you is the preventive PLANNING, the acquired KNOWLEDGE, the made TRAINING.

When a trader panics during a trade, it's not because of psychology, it's because of BAD PLANNING. You will not get a cent from the markets if you thing that before going trading again it's better you improve yourself psychology. You have to improve your PLAN, and you have to improve it such in a way that whatever next time will happen during a trade you'll already know what buttons you'll have to push.

So is psychology really important in trading? Surely, absolutely, it IS really important. Just it's not the hard part of trading. The really hard part is formalizing a preventive GOOD PLAN. A plan that not only has positive expectancy but is also able to let you not panic whatever the markets will do and that says to you exactly what to do in EVERY circumstance.

To be able to do such a plan you need KNOWLEDGE, psychology will give you nothing on this.

i begin to understand a bit, if compared to a car, we are talking about no matter how great the machine, if it doesn't have a good tire, it won't run, if it doesn't have a decent driver, it can't reach its optimum performance, if it doesn't have gas, it may never start.

but everything counts

I don't get it. I agree with the more experienced traders. Which do you??

Two things.

System perfection isn't the key with psychological issues in trading: If you take the same system and trade it on paper, with 1 contract, with 10 contracts and with 100 contracts you will get different results at feeling, thinking and acting levels - that's psychology.

The modern view isn't that you control your emotions (the brains of great traders still have measurable emotional reactions when the markets tick against them or near their loss exits) its that you control your reactions to your emotions. Your emotional brain structures will react no matter how good you are so the key is to reduce the stress of reaction and more importantly what you do in response to it.


However, repeated experience of system success, particularly with good training will reduce emotional reactivity and error even if nothing else was done. Its just that awareness and mental manipulations (psychology) will make it easier - and their lack may prevent it ever coming together in the first place.



Note: Paris might have to get to 1000 contracts before the pain stepped up

Why would it have to be the holy grail? If a trader knows a technique that has a positive expectancy, then why the drama?

Just do your freaking job.

I guess it is like anything else in life. Some people need the drama.

Otherwise, why would we be on these forums?

Why?

If you use proper position sizing, why does it matter how big the trade ends up being?

You risk 2% of your account. If that's 2 dollars, or 2 million, it's still 2%.

If you have 2 million on the trade, it means you have 100 million in the account. 2 isn't that big of a deal.

You run the numbers, you trade the system, you place the trade.

I think you people who are all into the feelings and emotions and drama and crap will never ever make it big. You limit yourselves, you don't give yourselves enough credit. If you say emotions can rule you, then they can. If you give them no consideration or power, then they cannot rule you.......

While experienced traders can joust...pick and poke at each other, my concern is that newbie traders will want to believe you and what you are saying. This imo is very dangerous.

Your response regarding risk management shows very clearly that you don't understand the management pressures of larger amounts of actual $$, and the psycoloigical issues that are involved when you trade accounts that are 6 or even 7 figures. THe 2% of this amount or that amount "sounds" right. But in reality there is a huge difference when it is your own dough.

Consider the demo trader....successful. Great system. Then starts trading real money and has issues.....Hmmmmmm....Why? Why isn't he a good trader? Because he isn't executing the way he needs to per his system. Why can't he execute? Because despite his "documented" sucess, something is standng in the way of confident trading. It is truly a mental issue that stands in the way. And it isn't a simple "aha" moment. It is a series and chain of these moments.

Mark Douglas's book (Trading in the zone) sez it all when it comes to this issue.

Good Trading

Jimno

Jimno, this is exactly the contrary. It's giving too much importance to psychology that is really, really dangerous for newbie traders, or at least it's a big waste of their time. It happened to me in my beginning.

When a newbie demo trades he does not really have a great system, he thinks he have but it's not true. He uses to increase it's position size after every loss, does average losses instead of closing, buys weakness and sells strength, risks 50% or more on every single trade, does not have a definite plan and generally makes all of the well known mistakes newbies usually make.

He wins of course, on demo, because on the short term it can happen that he gets 10-20 wins with very few losses. If it does not happen, a newbie thinks he has to change his entry rules, not surely his money management, or exit rules or the plan itself. So at a certain point it happens that he gets on demo those 10-20 wins with very few losses and he sees his demo account incredibly increased and thinks he is now really ready to go live.

When he goes live of course there will be a point when he starts losing. That moment what do you think a newbie does? Will he reconsider his money management or his plan? Surely not, because he has already proved it on demo. He will start to think to this madness of psychology.
He thinks: "Oh God, on demo I never worry when I get a 65% drawdown, it's when I'm live that I get these worries. I have to work on my psychology. My equity line reflects my self-esteem, the money are there, I can get all I want if I only really wanted. I have to convince myself that I deserve those money..." and all that crap that is written in those psychology books.

So he stops for a while (few minutes), strongly concentrates on himself, on his psychology, on the fact that he really wants those money, that he deserves them, that now he is really sure he deserves, he convinced himself now, he is ready to start trading again, and this time with a very big position size (he have to recover the lost money and now that he is sure to deserve money it's the right moment to go big size).

Well, now I think THIS is really dangerous.

A good book on MM would save him, where a book on psychology will only have the effect to increase his frustration, to let him really start doubting about his self-esteem, putting him on a really steep descent to financial and psychological ruin.

Now, I always say that there are a lot of good books on trading, on MM and also on psychology. But I read the book you mention (and others too) and I think there are not books about trading and psychology at the same time that are any good.
Just my opinion based on my experience.